Thank You

Error.

In 2005, Raghuram Rajan, then chief economist at the International Monetary Fund, warned an audience of prominent economists and bankers gathered at Jackson Hole, Wyo., that risk was building in the world's financial system.

According to a profile of Rajan in Time magazine this week, he argued nine years ago that "increasingly complex markets, which spewed out complicated instruments like credit-default swaps and mortgage-backed securities in ever greater quantities, had made the global financial system a riskier place, not less so as many believed. Such comments were considered near blasphemy at the time, and Rajan's audience didn't take him very seriously.

"Three years later in 2008, however, his views proved prophetic," writes Michael Schuman, a Time correspondent in India.

Unfortunately, Rajan, now governor of the Reserve Bank of India, the country's central bank, is worried again.

Time

"This time, he's fretting about the impact of the super-loose monetary policies pursued by the U.S. Federal Reserve and other central banks to combat the financial crisis and resulting recession. Long-term low interest rates and unorthodox programs to stimulate economies—like quantitative easing, or QE—could be laying the groundwork for more turmoil in financial markets," writes Time's Schuman.

As Rajan told Time, "My sense is that monetary policy can only do so much and beyond a certain point if you try to use monetary policy it does more damage than good."

In the Time interview, Rajan didn't pinpoint specifically where the most dangerous spots in global finance may be, but he did say that he believed assets of all sorts have become inflated. "I don't know what the right level of the market is," he told the magazine. "But I do know that, when I look at my portfolio and try to figure out where to invest, I can't think of what I think is fairly valued."

I normally wouldn't reference an interview with an Indian central banker in this column. But this one seems too important to ignore.

I also generally avoid focusing on the same hedge-fund manager two days in a row. But I'll make an exception for Carl Icahn, given his success in picking stocks over the years.

But on Tuesday, Icahn filed a lengthy blog post for Yahoo!—using the site's Tumblr platform—in which he discusses his activist approach to investing in stocks and provides a list of stocks that have benefited from Icahn-led board involvement.

Yahoo! Finance

"What makes me especially happy is that I believe that IEP's performance not only in Q2 but since 2000, gives testimony to my belief that activism, when properly practiced, meaningfully enhances value for all shareholders as well as the economy in general," he writes. "If you bought IEP in the beginning of 2000 you would have an annualized return of 21.5% compared to the S&P 500's 3.8% and if you bought IEP April 1, 2009, you would have an annualized return of 34.3% compared to the S&P 500's 20.5%, through July 31, 2014."

Icahn's article includes a list of the annualized stock-price returns of 23 companies whose boards Icahn designees joined between Jan. 1, 2009 and June 30, 2014.

"If the person invested in each company on the date that the designee joined the Board and sold on the date that the Icahn designee left the Board (or continued to hold through June 30, 2014 if the designee did not leave the Board) they would have obtained an annualized return of 27%," Icahn writes.

Not surprisingly, shares of Icahn Enterprises are up 40% over the past year, more than double that of the Standard & Poor's 500.

Though the stock market was up 30% in 2013, that fact was news to most investors.

According to Forbes.com, a new Gallup survey shows that nine out of ten people are unaware that the stock market climbed 30% last year. Most believe that stocks performed well, just not that well—17% say stocks increased 20% and 37% say stocks increased 10%. Three out of ten people thought stocks stayed the same or decreased.

Much of that ignorance, according to Forbes, is because many Americans have moved away from stock investing.

"Just 52% of Americans were invested in the stock market last year, down from 62% in 2008, according to a previous Gallup survey," Forbes writes. "Another study pegs equity allocations at their lowest levels over the last half century. This includes workers who own equities through money invested in a 401(k) or other retirement account."

Given that regular Americans need the long-term benefits of stocks for their retirement far more than the wealthy, this news that they have retreated from stocks in the main seems troubling.